Mid-Hudson Energy Solutions Road Map Draft (26 Oct. 2011) Comments welcome! leo@etothefourth.com 1

The Mid-Hudson Regional Energy Solutions Road Mapfor

Mid-Hudson Regional Economic Development Council

Prepared by Mike Gordon, Leo Wiegman, Maria Fields, and Herb Oringel

on behalf of the

Northern Westchester Energy Action Consortiumwww.nweac.org

DRAFT

latest revision: 26 October 2011

operating costs

energy costs

reduced energy costs

increased profits $ for Jobs and Reinvestment

Why energy opportunities exist in every sector of our economy

Mid-Hudson Energy Solutions Road Map Draft (26 Oct. 2011) Comments welcome! leo@etothefourth.com 2

Contents

Goals for the Mid-Hudson Energy Solutions Road Map 3

Why is energy such an important driver in economic development? 3

Table 1 Mid-Hudson utility costs & savings projection 3

Potential Strategies for Mid-Hudson Energy Solutions 4

Part 1. Energy supply and demand today 6Table 2 Existing generation capacity today in New York State 6Some energy supply facts 6

Some energy supply facts for Mid-Hudson region 6

Some energy demand facts 7

Conclusions 7

Part 2: Energy solutions: Five demand and supply side options 8

Solution 1 demand side: Energy Efficiency (EE) 8

Solution 2 demand side: Demand Response (DR) 9

Solution 3 demand side: Microgrid Development (MG) 10

Solution 4 supply side: Distributed Generation (DG) 11

Solution 5: Supply Side: Energy Storage (ES) 13

Part 3 Expected outcomes for Mid-Hudson jobs and economy 14

AppendixDefinition: Energy Efficiency (EE) 16Definition: Demand Response (DR) 17Table 3 Sample demand response revenues 17Definition: Microgrid (MG) 18Definition: Distributed Generation (DG) 19Definition: Energy Storage (ES) 20Figure 1 New York State Energy Flow 21Figure 2 New York State Primary Consumption of Energy by Sector: 1980-2009(in trillion Btu) 22Figure 3 NYS electricity price history: 2000-2009 22Figure 4 New York State Electric Generation by Fuel Type: 2010 (GWh) 23Figure 5 Zone maps for electricity 23Figure 6 New York State Baseline Forecast of Electric Demand Projections: 2011-2021 24Table 4 Electric GenerationCapability by Zone and Type: Summer 24Figure 7 Service territories for electricity providers in Mid-Hudson 2010 25Figure 8 Service territories for natural gas providers in Mid-Hudson 2010 26Figure 9 The People Power Microgrid concept for Peekskill pilot 27Figure 10 Electric load characteristics in Mid-Hudson zones 28Figure 11 The Energize Bedford Program 29Table 5 Some Mid-Hudson Region Demographics by County 30Table 6 Some Household Energy Data for Mid-Hudson Region 31Figure 12 Can we make these run backwards? 32

Note to the reader: This draft Energy Solutions Road Map uses the New York Regional Economic Development Councils’ definition of the Mid-Hudson region. The Mid-Hudson Region population grew over 5% between 2000 and 2010–a growth rate two and one half times faster than the state’s overall population growth of 2%–and includes the following seven counties, alphabetically (with 2010 Census population figures in parentheses): Dutchess (297,488), Orange (372,813), Putnam (95,745), Rockland (311,687), Sullivan (77,547), Ulster (182,493), Westchester (949,113).[source: http://nyworks.ny.gov/content/mid-hudson ]

Mid-Hudson Energy Solutions Road Map Draft (26 Oct. 2011) Comments welcome! leo@etothefourth.com 3

Goals for the Mid-Hudson Energy Solutions Road Map▶▶ Demonstrate the job creation and cost savings impacts of clean energy technology deployment on the

demand side (energy efficiency and microgrid) and on the supply side (distributed generation and energy storage).

▶▶ Enhance grid reliability and energy security using competition, local community aggregation, and private sector funding.

▶▶ Develop state-wide deployment of energy innovations for demand and supply side with concrete policy proposals to remove barriers to wide-scale adoption.

Why is energy such an important driver in economic development? The Mid-Hudson region’s households spend $2.4 billion on utilities per year ($3,000 for space heating and appliances per household per year). If just 5% savings were achieved through common energy upgrades, the residential sector alone would save $119 million annually. (See Table 1.)

Every business sector in the Mid-Hudson Region needs energy and incurs energy-related expenses. Operational or mechanical inefficiencies exist in every sector of commerce. Therefore, each sector has significant energy savings opportunities. Energy solutions have powerful cross-cutting benefits for economic development and can often be funded out of net savings realized–making available operating capital for staff and business reinvestment. In a typical community, the business sector’s aggregate utility expenses are about two-thirds that of the aggregate residential sector. On that basis, the Mid-Hudson region’s businesses may spend as much as $1.6 billion on utilities per year, yielding $80 million in easily achievable savings to reinvest. In short, energy efficiency alone could make available $220 million per year or more in private capital for job retention and creation in our seven counties.

This road map presents five interlocking and mutually reinforcing energy solution paths–the first of which is energy efficiency–with deep potential for the Mid-Hudson’s seven counties. The high level overview in this road map invites more detailed examinations of each of these four solution paths in the future.

▶▶ Solution paths 1, 2, and 3, address the demand side of the energy ledger, respectively: energy efficiency, demand response, and microgrid.

▶▶ Solution paths 4 and 5 address the supply side of the energy ledger, respectively: distributed generation (including renewables) and energy storage.

It is important to note that a fuller examination will point out significant resource efficiencies and self-financing upgrades are achievable in water consumption and waste stream management as well.

Table 1 Mid-Hudson utility costs & savings projection (households)Estimated Household utility costs/year Annual savings with modest energy upgrades

$3,000 5.0%Total utility costs all households Total potential savings all households

Dutchess $309,612,000 $15,480,600Orange $366,699,000 $18,334,950Putnam $103,002,000 $5,150,100Rockland $284,061,000 $14,203,050Sullivan $89,250,000 $4,462,500Ulster $202,497,000 $10,124,850Westchester $1,021,131,000 $51,056,550Totals $2,376,252,000 $118,812,600

Mid-Hudson Energy Solutions Road Map Draft (26 Oct. 2011) Comments welcome! leo@etothefourth.com 14

Part 3 Expected outcomes for Mid-Hudson jobs and economyWhen the Mid-Hudson Region implements the solution paths presented here ,the resulting impact on economic development in our seven counties will be positive, pervasive, and permanent.

As a result of awareness, financing, effective ancillary services support for wind resources, private sector contributions, and full value pricing that includes capacity tag valuation for solar resources, we will have installed cost effective (grid parity) renewable distributed generation of 500 new megawatts (MWs) and 500,000 new megawatt-hours (MWhs) in the region by 2018.

A. By 2024, we will have achieved: ▶▶ 1,000 heretofore unplanned MWs of demand reduction in Zones G, H, I & J by 2018;

▶▶ 4,000 heretofore unplanned gigawatt-hours (GWhs) of efficiency in Zones G, H, I & J by 2018;

▶▶ A tripling of these efficiency and demand reduction numbers by 2021, and an additional doubling of them by 2024, through local expansion and through state-wide replication.

B. These achievements will create:19 ▶▶ More than 70,000 jobs for one year by 2018;

▶▶ More than 13,000 permanent jobs by 2018;

▶▶ More than 200,000 jobs for one year, state-wide by 2021;

▶▶ More than 30,000 permanent jobs by 2021;

▶▶ More than 300,000 jobs for one year, state-wide by 2024;

▶▶ More than 50,000 permanent jobs by 2024; and

▶▶ Private sector investment in New York State’s energy efficiency infrastructure of more than $6 billion by 2018, more than $18 billion by 2021, and more than $40 billion by 2024.20

C. Additionally, the Mid Hudson region will lead in creating:▶▶ 1,000 MWs of additional capacity demand response resources with 93%+ reliability, dispersed into

every distribution loop, by 2018, in Zones G, H, I, J & K;

▶▶ 500 MWs of reserves demand response resources with 93%+ reliability, dispersed into every distribution loop, by 2018, in Zones G, H, I, J & K; and

▶▶ 200 MWs of regulation demand response resources with 99%+ reliability, dispersed into every distribution loop, by 2018, in Zones G, H, I, J & K;

▶▶ Through private investment of more than $500 million.

19 Assumption: Each MW reduced injects $1.2 million annually in electric spend into the economy, creating 11 permanent jobs per million dollars saved annually. The 11 permanent jobs per million saved annually, is an extrapolation of the DOE’s direct jobs calculator that assesses the direct jobs value of $1 million spent, one-time: 11 one-year jobs. The capital cost of a MW saved is projected to be $6.6 million, assuming the average pay-back for energy reduction measures is 5.5 years.20 This reflects the very conservative assumption that pay backs for energy efficiency will be reduced because low hanging fruit has been achieved. This is conservative because it assumes little or no technology development in the efficiency industry.

Mid-Hudson Energy Solutions Road Map Draft (26 Oct. 2011) Comments welcome! leo@etothefourth.com 15

D. This private investment under demand response initiatives will create: ▶▶ Regional annual earnings and savings of more than $125 million;

▶▶ More than 1,300 permanent jobs; and

▶▶ More than 4,000 one-year jobs.

The policy initiatives related to energy efficiency and demand response that we propose cost nothing on net. They are simply transfers of dollars from one set of stakeholders to others.

A qualitative and directional analysis of the policy levers we will analyze for deployment include the following:

▶▶ #1. An Energy Efficiency Portfolio Standard (EEPS) will create a slight per unit cost increases for all consumers from the efficiency surcharge.

▶▶ #2. This slight increase will be offset by per unit cost decreases for all consumers: When our total consumption goes down, clearing prices go down due to the favorable changes in the supply/demand balance.

On net this might create a transfer from those consumers who do nothing to enhance energy efficiency, to those consumers who do something to upgrade their facility. On the other hand, it might not cost any consumer anything, because #1 above could be more than offset by #2 above.

For consumers who do upgrade their facility, there no doubt that they will benefit. In addition to the offsetting impact outlined above, upgrading consumers will see additional benefits:

▶▶ #3. Consumers who become more energy efficient will see total bill decreases, due to fewer units of energy purchased,

▶▶ #4. Consumers who become more energy efficient will see earnings beyond savings, due to their being able to sell energy efficiency white certificates (under an effective EEPS program in New York).

If all consumers benefit from demand-side initiatives, who pays?

The losers would be the centralized, fossil fuel power plants and their fuel suppliers from out of state and overseas. These traditional power plants would see

▶▶ Decreased margins due to lower clearing costs (see #2 above); and

▶▶ Decreased unit sales due to energy efficiency.

As a result, the fuel suppliers

▶▶ Would not change their prices, unless doing so on a worldwide scale; But they

▶▶ Would lose sales into the New York State markets.